Whitewater's Bomboard breaks ground in search for investors

John West has rubbed shoulders with some of the most innovative business figures of the late 20th century.

They range from top Silicon Valley venture capitalists to the founders of firms like Sun Microsystems. But when it came time to find investors for his new company, Bomboard, West didn't turn to those heavy hitters.

Whitewater-based Bomboard is developing a reasonably-priced, portable jet ski. Bomboard is one of the few companies, possibly the only, in Wisconsin that is taking advantage of a little-discussed provision in the JOBS Act (Jumpstart Our Business Startups) that took effect in 2012.

The provision — some call it crowdfunding on steroids — allows companies to advertise private placements, or so-called Reg. D offerings. Companies seeking capital are allowed to put ads on billboards, newspapers and online, and even send letters to random recipients, to attract investors.

"I'd much rather have a small group of enthusiasts and fellow gear heads instead of a bunch of venture capitalists. I've done that," said West, Bomboard founder and chief executive officer.

For a previous business, West licensed the technology for his Illinois-based Cimlinc Inc. from Stanford University graduate student Andy Bechtolsheim, who went on to found Sun Microsystems. Cimlinc, which made software for manufacturers, raised $26 million from venture capitalists, and for 10 years had as a board member John Doerr, the venture capitalist who has directed funding to tech companies including Sun, Amazon.com and Google.

For Bomboard, West is turning to wealthy individuals rather than his Silicon Valley contacts to raise $2 million in two separate offerings to fund preproduction engineering and commercialization.

A colorful shot of a jet ski racing across an expanse of water on Bomboard's website has helped the company connect with potential customers, West said.

But Bomboard also is trying to lure individual investors to the area of the site where the company details its primary market (14- to 34-year-olds), rolls out plans (direct sales to consumers that begin seven or eight months after funding is secured) and other details.

A shout-out in Gizmag in late March resulted in 30,000 hits on the site, West said. Before the JOBS Act, the company would not have been allowed to respond to those searchers with the kind of information Bomboard provides on the site. So far, Bomboard has raised $160,000, West said.

Several Wisconsin-based lawyers and financiers said it is the first time that they have seen a company use the loosened rules for advertising private placements.

Neither Paul Jones, co-chairman of the venture capital practice group at the law firm Michael Best & Friedrich, nor Paul Wrycha, a partner in the Madison office of Foley and Lardner, says he has used it in any deals.

Venture capitalists would likely react negatively to the advertising because they like to work through connections, Jones said. "But a reason for doing it would be if you think venture capitalists are vultures — and you often can get a higher price from nonprofessional investors," he said.

Other motivations might include having name recognition or past successes that the advertising could capitalize on, Wrycha said.

Companies that advertise their offerings have the burden of making absolutely certain that their investors have a net worth of $1 million or more or meet other criteria to be considered an accredited investor, Wrycha said. But there are groups at accounting firms and other businesses springing up to help with that, he added.

Neither Jeff Rusinow, who was principal investor in BuySeasons.com and other companies, nor Tom Shannon, who oversaw the sale of Prodesse Inc. and is president of Brightstar Wisconsin Foundation Inc., says he has encountered anyone using the new rules either.